National Fuel Reports First Quarter Earnings

February 4, 2021 4:45 PM EST

Get instant alerts when news breaks on your stocks. Claim your 1-week free trial to StreetInsider Premium here.

WILLIAMSVILLE, N.Y., Feb. 04, 2021 (GLOBE NEWSWIRE) -- National Fuel Gas Company (“National Fuel” or the “Company”) (NYSE: NFG) today announced consolidated results for the first quarter of its 2021 fiscal year.

FISCAL 2021 FIRST QUARTER SUMMARY

  • GAAP net income of $77.8 million, or $0.85 per share, which includes a $55.2 million non-cash, after-tax impairment of oil and gas properties, and a $37.0 million after-tax gain on the sale of the Company's timber properties, compared to GAAP net income of $86.6 million, or $1.00 per share, in the prior year.
  • Adjusted operating results of $97.0 million, or $1.06 per share, compared to $87.4 million, or $1.01 per share, in the prior year (see non-GAAP reconciliation on page 2).
  • Adjusted EBITDA of $251.7 million, compared to $222.9 million in the prior year (see non-GAAP reconciliation on page 21).
  • Pipeline & Storage segment Adjusted EBITDA of $58.1 million, an increase of 35% from the prior year.
  • Gathering segment Adjusted EBITDA of $39.8 million, an increase of 35% from the prior year.
  • E&P segment Adjusted EBITDA of $100.7 million, an increase of 9% from the prior year.
  • E&P segment net production of 79.5 Bcfe, an increase of 21.1 Bcfe, or 36%, from the prior year, which includes the impact of the Company's Appalachian asset acquisition and approximately 4 Bcf of price-related natural gas curtailments.
  • Average realized natural gas prices of $2.14 per Mcf, down $0.18 per Mcf from the prior year.
  • Average realized oil prices of $49.91 per Bbl, down $13.01 per Bbl from the prior year.
  • Utility segment completed its system modernization program for calendar year 2020, replacing over 150 miles of older vintage pipelines. While maintaining the Company's long-standing focus on the safety and reliability of its distribution network, this program has contributed to the more than 60% reduction in Utility greenhouse gas emissions since 1990.
  • Company completed the sale of substantially all of its timber assets in Pennsylvania, with net proceeds of $104.6 million.
  • Company is increasing its fiscal 2021 earnings guidance to a range of $3.65 to $3.95, an increase of $0.10 at the midpoint.

MANAGEMENT COMMENTS

David P. Bauer, President and Chief Executive Officer of National Fuel Gas Company, stated: “National Fuel had an excellent start to our fiscal 2021 on the strength of our recently completed Empire North expansion project and our Appalachian E&P and gathering acquisition. We continue to see the benefits of these newly acquired assets, with record production at Seneca driving meaningful earnings growth in our gathering segment and long-term, sustainable reductions in the cost structure of our upstream business.

As we continue to confront the COVID-19 pandemic, the safety of our employees, customers, and communities remains paramount to our daily operations across each of our businesses. National Fuel and its dedicated workforce have retained their focus on business continuity during this health crisis, and to date, the Company has not experienced any significant financial or operational impacts.

Looking forward, we are well-positioned to execute on our near-term integrated growth opportunities, with preliminary construction activities on our FM100 expansion and modernization project – the largest in the Company’s history – expected to start in the next few weeks. This project, which will add more than $50 million in annual Pipeline and Storage revenues, further supports the integrated development of our prolific and highly-economic Marcellus and Utica assets and puts us on a path to generating meaningful consolidated free cash flow in fiscal 2022.

Additionally, we continue to make progress with our ESG disclosures and initiatives. Across our system, we're making investments that will reduce our operational and fugitive emissions. We're also aggressively promoting our Utility's conservation and energy efficiency programs to help lower the end-use emissions of our customers. Lastly, both on our own and through participation in programs like the Low Carbon Resources Initiatives, we're evaluating new low- and zero-carbon fuel sources and technologies. All of these initiatives make National Fuel well-positioned to play a meaningful and continued role in the decarbonization of the economy.”

RECONCILIATION OF GAAP EARNINGS TO ADJUSTED OPERATING RESULTS

     
  Three Months Ended
   December 31,
(in thousands except per share amounts) 2020 2019
Reported GAAP Earnings $77,774  $86,591 
Items impacting comparability:    
Impairment of oil and gas properties (E&P) 76,152   
Tax impact of impairment of oil and gas properties (20,980)  
Gain on sale of timber properties (Corporate / All Other) (51,066)  
Tax impact of gain on sale of timber properties 14,069   
Unrealized (gain) loss on other investments (Corporate / All Other) 1,298  1,019 
Tax impact of unrealized (gain) loss on other investments (272) (214)
Adjusted Operating Results $96,975  $87,396 
     
Reported GAAP Earnings Per Share $0.85  $1.00 
Items impacting comparability:    
Impairment of oil and gas properties, net of tax (E&P) 0.60   
Gain on sale of timber properties, net of tax (Corporate / All Other) (0.40)  
Unrealized (gain) loss on other investments, net of tax (Corporate / All Other) 0.01  0.01 
Adjusted Operating Results Per Share $1.06  $1.01 
         

FISCAL 2021 GUIDANCE UPDATE

National Fuel is revising its fiscal 2021 earnings guidance to reflect the results of the first fiscal quarter, along with updated commodity price and operating unit cost assumptions for the balance of the year. The Company is now projecting that earnings, excluding items impacting comparability, will be within the range of $3.65 to $3.95 per share, an increase of $0.10 per share from the midpoint of the Company’s prior guidance range. The increase from the Company’s prior earnings guidance reflects higher expected price realizations on Seneca’s oil production and lower expected exploration and production operating unit costs, partially offset by lower expected price realizations on Seneca’s natural gas production.

The Company is now assuming that NYMEX natural gas prices will average $2.75 per MMBtu for the remainder of fiscal 2021, a decrease of $0.25 per MMBtu from the $3.00 per MMBtu assumed in the previous guidance. Additionally, the Company is now assuming that WTI oil prices will average $52.50 per Bbl for the remainder of the year, a $15.00 increase from the $37.50 per Bbl assumed in the previous guidance. For guidance purposes, the Company’s updated projections approximate the current NYMEX forward markets for natural gas and oil and consider the impact of local sales point differentials and new physical firm sales, transportation, and financial hedge contracts.

Seneca currently has firm sales contracts in place for 216 Bcf, or approximately 93% of its projected remaining fiscal 2021 Appalachian production, limiting its exposure to in-basin markets. Approximately 186 Bcf of those sales, or 80% of Seneca’s expected remaining Appalachian production, are either matched by a financial hedge, including a combination of swaps and no-cost collars, or were entered into at a fixed price. Additionally, Seneca has financial hedges in place for 1,079 Mbbl, or approximately 67%, of its expected remaining oil production for the fiscal year.

The Company’s other guidance assumptions remain largely unchanged from the previous guidance. Additional details on the Company's updated forecast assumptions and business segment guidance for fiscal 2021 are outlined in the table on page 7.

DISCUSSION OF FIRST QUARTER RESULTS BY SEGMENT

The following earnings discussion of each operating segment for the quarter ended December 31, 2020 is summarized in a tabular form on pages 8 and 9 of this report. It may be helpful to refer to those tables while reviewing this discussion.

Note that management defines Adjusted Operating Results as reported GAAP earnings adjusted for items impacting comparability, and Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability.

Upstream Business

Exploration and Production Segment

The Exploration and Production segment operations are carried out by Seneca Resources Company, LLC ("Seneca"). Seneca explores for, develops and produces natural gas and oil reserves, primarily in Pennsylvania and California.

  
 Three Months Ended
 December 31,
(in thousands)2020 2019 Variance
GAAP Earnings$(29,623) $23,977  $(53,600)
Impairment of oil and gas properties, net of tax55,172    55,172 
Adjusted Operating Results$25,549  $23,977  $1,572 
      
Adjusted EBITDA$100,744  $92,100  $8,644 
            

Seneca’s first quarter GAAP earnings decreased $53.6 million versus the prior year. This was primarily driven by a non-cash, pre-tax impairment charge of $76.2 million ($55.2 million after-tax) to write-down the value of Seneca’s oil and natural gas reserves under the full cost method of accounting. This method requires Seneca to perform a quarterly “ceiling test” comparing the present value of future net revenues from its oil and natural gas reserves based on an unweighted arithmetic average of the first day of the month oil and gas prices for each month within the 12-month period prior to the end of the reporting period (“the ceiling”) with the book value of those reserves at the balance sheet date. If the book value of the reserves exceeds the ceiling, a non-cash impairment charge must be recorded in order to reduce the book value of the reserves to the calculated ceiling. Seneca does not expect to incur impairment charges in the remaining quarters of fiscal 2021. Excluding this item, Seneca’s first quarter earnings increased $1.6 million.

Seneca produced 79.5 Bcfe during the first quarter, an increase of 21.1 Bcfe, or 36%, from the prior year, despite the impact of approximately 4 Bcf of price-related curtailments. The increase was primarily driven by higher natural gas production from the Company's fourth quarter fiscal 2020 acquisition of Appalachian upstream assets, as well as production from new Marcellus and Utica wells. Net production increased 16.4 Bcf to 45.7 Bcf in the Eastern Development Area ("EDA"), primarily due to higher production from the acquisition. Net production increased 5.0 Bcf to 29.9 Bcf in Seneca’s Western Development Area ("WDA"), primarily due to the ongoing development program in the region. Oil production for the first quarter decreased 38,000 Bbls, or 6%, from the prior year due to production declines in Seneca's Midway Sunset and Lost Hills areas as a result of reduced steam activity and delayed workover expenses in response to lower commodity prices in the second half of fiscal 2020. These declines were partially offset by new production brought on-line in Seneca’s Pioneer and Coalinga development areas.

Seneca's average realized natural gas price, after the impact of hedging and transportation costs, was $2.14 per Mcf, a decrease of $0.18 per Mcf from the prior year. Seneca's average realized oil price, after the impact of $6.43 per Bbl of hedging gains, was $49.91 per Bbl, a decrease of $13.01 per Bbl compared to the prior year. The decline in oil price realizations was due primarily to lower market prices for unhedged crude oil at local sales points in California.

Lease operating and transportation (“LOE”) expense increased $14.8 million primarily due to higher transportation costs in Appalachia from increased production and an increase in well repairs, as well as higher steam facility repairs and maintenance and steam fuel costs in California. LOE expense includes $46.7 million in intercompany expense for gathering and compression services used to connect Seneca’s Marcellus and Utica production to sales points along interstate pipelines. DD&A expense increased $1.2 million due largely to higher natural gas production, partially offset by the impact of ceiling test impairments recorded during fiscal 2020. Seneca's general and administrative ("G&A") expense increased $1.6 million due primarily to higher personnel costs.

On a unit of production basis, Seneca's combined G&A, LOE, other operation and maintenance ("O&M") expense, and Property, Franchise, and Other Taxes decreased $0.12 per Mcfe, or 10%, during the quarter.

Interest expense increased by $1.4 million from the prior year, primarily driven by additional long-term borrowings from the Company's long-term debt issuance in June 2020 that was used to fund a portion of the Company's Appalachian acquisition. The increase in Seneca's effective income tax rate was largely driven by an increase to a valuation allowance for deferred tax assets that was initially established in the second quarter of fiscal 2020.

Midstream Businesses

Pipeline and Storage Segment

The Pipeline and Storage segment’s operations are carried out by National Fuel Gas Supply Corporation (“Supply Corporation”) and Empire Pipeline, Inc. (“Empire”). The Pipeline and Storage segment provides natural gas transportation and storage services to affiliated and non-affiliated companies through an integrated system of pipelines and underground natural gas storage fields in western New York and Pennsylvania.

  
 Three Months Ended
 December 31,
(in thousands)2020 2019 Variance
GAAP Earnings$24,183  $18,105  $6,078 
      
Adjusted EBITDA$58,134  $42,942  $15,192 
            

The Pipeline and Storage segment’s first quarter GAAP earnings increased $6.1 million versus the prior year, with higher operating revenues partially offset by higher DD&A expense and higher interest expense. The increase in operating revenues of $15.5 million, or 22%, was largely due to an increase in Supply Corporation's transportation and storage rates effective February 1, 2020, in accordance with Supply Corporation's rate case settlement, coupled with new demand charges for transportation service from the Company's Empire North expansion project, which was placed in service near the end of the fourth quarter of fiscal 2020. The increase in DD&A expense of $3.9 million was primarily attributable to an increase in Supply Corporation's depreciation rates associated with its rate case settlement combined with incremental depreciation from the Empire North expansion project. The increase in interest expense of $3.6 million was primarily driven by additional long-term borrowings from the Company's long-term debt issuance in June 2020.

Gathering Segment

The Gathering segment’s operations are carried out by National Fuel Gas Midstream Company, LLC’s limited liability companies. The Gathering segment constructs, owns and operates natural gas gathering pipelines and compression facilities in the Appalachian region, which primarily delivers Seneca’s gross Appalachian production to the interstate pipeline system.

  
 Three Months Ended
 December 31,
(in thousands)2020 2019 Variance
GAAP Earnings$20,550  $15,944  $4,606 
      
Adjusted EBITDA$39,793  $29,431  $10,362 
            

The Gathering segment’s first quarter GAAP earnings increased $4.6 million versus the prior year. The increase was primarily driven by higher operating revenues, which was partially offset by higher DD&A expense, higher O&M expenses and higher interest expense. Operating revenues increased $12.2 million, or 35%, primarily due to increased gathering throughput resulting from the Company's Appalachian acquisition in the fourth quarter of fiscal 2020 and from new Appalachian wells that were brought on-line. The increase in DD&A expense of $2.8 million was primarily attributable to incremental depreciation expense related to the recent Appalachian acquisition, as well as higher average depreciable plant in service compared to the prior year. Compression leasing expenses associated with the Appalachian acquisition were primarily responsible for the $1.9 million increase in O&M expense, partly offset by a decline in compressor station O&M expenses on Company owned facilities. The increase in interest expense of $1.9 million was primarily driven by additional long-term borrowings from the Company's long-term debt issuance in June 2020 that was used to fund a portion of the Appalachian acquisition.

Downstream Businesses

Utility Segment

The Utility segment operations are carried out by National Fuel Gas Distribution Corporation (“Distribution”), which sells or transports natural gas to customers located in western New York and northwestern Pennsylvania.

  
 Three Months Ended
 December 31,
(in thousands)2020 2019 Variance
GAAP Earnings$23,037  $26,583  $(3,546)
      
Adjusted EBITDA$56,968  $59,463  $(2,495)
            

The Utility segment’s first quarter GAAP earnings decreased $3.5 million versus the prior year primarily due to higher O&M expense and a higher effective income tax rate. The $2.4 million increase in O&M expense was primarily attributable to incremental expense recorded to increase the allowance for uncollectible accounts due to the potential for customer non-payment resulting from the current economic backdrop brought on by COVID-19, as well as higher personnel costs. Warmer than normal weather in Distribution's Pennsylvania service territory resulted in a decline in customer usage and margin, which was largely offset by higher revenues earned through the Company's system modernization tracking mechanism in its New York service territory. Weather in Distribution's Pennsylvania service territory was 11% warmer on average than last year, and 17% warmer than normal. The impact of weather variations on earnings in Distribution's New York service territory is largely mitigated by that jurisdiction's weather normalization clause. The increase in the Utility segment's effective income tax rate was primarily due to the non-recurring impact of permanent book versus tax differences.

Corporate and All Other

The Company’s operations that are included in Corporate and All Other generated combined earnings of $39.6 million in the current year first quarter, which was a $37.6 million increase over combined earnings of $2.0 million generated in the prior-year first quarter. The increase was primarily driven by a gain recognized on the sale of the Company's timber properties of $51.1 million ($37.0 million after-tax). The Company completed the sale of substantially all of its timber assets in Pennsylvania on December 10, 2020 for net proceeds of $104.6 million. The proceeds from this sale were used to complete a reverse like-kind exchange in conjunction with the Company's fourth quarter fiscal 2020 Appalachian acquisition of certain upstream assets and midstream gathering assets.

EARNINGS TELECONFERENCE

The Company will host a conference call on Friday, February 5, 2021, at 11 a.m. Eastern Time to discuss this announcement. Pre-registration is required to access the teleconference by phone in a listen-only mode by following this link: http://www.directeventreg.com/registration/event/9363257. To access the webcast, visit the Events Calendar under the News & Events page on the NFG Investor Relations website at investor.nationalfuelgas.com. A replay of the conference call will be available approximately two hours following the teleconference at the same website link and by phone (toll-free) at 800-585-8367 using conference ID number “9363257”. Both the webcast and conference call replay will be available until the close of business on Friday, February 12, 2021.

National Fuel is an integrated energy company reporting financial results for four operating segments: Exploration and Production, Pipeline and Storage, Gathering, and Utility. Additional information about National Fuel is available at www.nationalfuelgas.com.

   
Analyst Contact:Kenneth E. Webster716-857-7067
Media Contact:Karen L. Merkel716-857-7654
   

Certain statements contained herein, including statements identified by the use of the words “anticipates,” “estimates,” “expects,” “forecasts,” “intends,” “plans,” “predicts,” “projects,” “believes,” “seeks,” “will,” “may” and similar expressions, and statements which are other than statements of historical facts, are “forward-looking statements” as defined by the Private Securities Litigation Reform Act of 1995. Forward-looking statements involve risks and uncertainties, which could cause actual results or outcomes to differ materially from those expressed in the forward-looking statements. The Company’s expectations, beliefs and projections contained herein are expressed in good faith and are believed to have a reasonable basis, but there can be no assurance that such expectations, beliefs or projections will result or be achieved or accomplished. In addition to other factors, the following are important factors that could cause actual results to differ materially from those discussed in the forward-looking statements: the length and severity of the recent COVID-19 pandemic, including its impacts across our businesses on demand, operations, global supply chains and liquidity; changes in economic conditions, including global, national or regional recessions, and their effect on the demand for, and customers’ ability to pay for, the Company’s products and services; changes in the price of natural gas or oil; impairments under the SEC’s full cost ceiling test for natural gas and oil reserves; the creditworthiness or performance of the Company’s key suppliers, customers and counterparties; financial and economic conditions, including the availability of credit, and occurrences affecting the Company’s ability to obtain financing on acceptable terms for working capital, capital expenditures and other investments, including any downgrades in the Company’s credit ratings and changes in interest rates and other capital market conditions; changes in laws, regulations or judicial interpretations to which the Company is subject, including those involving derivatives, taxes, safety, employment, climate change, other environmental matters, real property, and exploration and production activities such as hydraulic fracturing; delays or changes in costs or plans with respect to Company projects or related projects of other companies, including disruptions due to the COVID-19 pandemic, as well as difficulties or delays in obtaining necessary governmental approvals, permits or orders or in obtaining the cooperation of interconnecting facility operators; the Company's ability to complete planned strategic transactions; the Company's ability to successfully integrate acquired assets and achieve expected cost synergies; governmental/regulatory actions, initiatives and proceedings, including those involving rate cases (which address, among other things, target rates of return, rate design and retained natural gas), environmental/safety requirements, affiliate relationships, industry structure, and franchise renewal; changes in price differentials between similar quantities of natural gas or oil sold at different geographic locations, and the effect of such changes on commodity production, revenues and demand for pipeline transportation capacity to or from such locations; the impact of information technology disruptions, cybersecurity or data security breaches; factors affecting the Company’s ability to successfully identify, drill for and produce economically viable natural gas and oil reserves, including among others geology, lease availability, title disputes, weather conditions, shortages, delays or unavailability of equipment and services required in drilling operations, insufficient gathering, processing and transportation capacity, the need to obtain governmental approvals and permits, and compliance with environmental laws and regulations; increasing health care costs and the resulting effect on health insurance premiums and on the obligation to provide other post-retirement benefits; other changes in price differentials between similar quantities of natural gas or oil having different quality, heating value, hydrocarbon mix or delivery date; the cost and effects of legal and administrative claims against the Company or activist shareholder campaigns to effect changes at the Company; uncertainty of oil and gas reserve estimates; significant differences between the Company’s projected and actual production levels for natural gas or oil; changes in demographic patterns and weather conditions; changes in the availability, price or accounting treatment of derivative financial instruments; changes in laws, actuarial assumptions, the interest rate environment and the return on plan/trust assets related to the Company’s pension and other post-retirement benefits, which can affect future funding obligations and costs and plan liabilities; economic disruptions or uninsured losses resulting from major accidents, fires, severe weather, natural disasters, terrorist activities or acts of war; significant differences between the Company’s projected and actual capital expenditures and operating expenses; or increasing costs of insurance, changes in coverage and the ability to obtain insurance. The Company disclaims any obligation to update any forward-looking statements to reflect events or circumstances after the date thereof.

NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES

GUIDANCE SUMMARY

As discussed on page 2, the Company is revising its earnings guidance for fiscal 2021. Additional details on the Company's forecast assumptions and business segment guidance are outlined in the table below.

The revised earnings guidance range does not include the impact of certain items that impacted the comparability of earnings during the first quarter, including: (1) the after-tax impairment of oil and gas properties, which reduced earnings by $0.60 per share; (2) the after-tax gain on sale of timber properties, which increased earnings by $0.40 per share; and (3) the after-tax unrealized loss on other investments, which reduced earnings by $0.01 per share. While the Company expects to record additional adjustments to unrealized gain or loss on other investments during the nine months ending September 30, 2021, the amounts of these and other potential adjustments are not reasonably determinable at this time. As such, the Company is unable to provide earnings guidance other than on a non-GAAP basis.

    
 Updated FY 2021 Guidance Previous FY 2021 Guidance
Consolidated Earnings per Share, excluding items impacting comparability$3.65 to $3.95 $3.55 to $3.85
Consolidated Effective Tax Rate~ 26% ~ 26%
    
Capital Expenditures (Millions)   
Exploration and Production$350 - $390 $350 - $390
Pipeline and Storage$250 - $300 $250 - $300
Gathering$30 - $40 $30 - $40
Utility$90 - $100 $90 - $100
Consolidated Capital Expenditures$720 - $830 $720 - $830
    
Exploration & Production Segment Guidance*   
    
Commodity Price Assumptions   
NYMEX natural gas price$2.75 /MMBtu $3.00 /MMBtu
Appalachian basin spot price (winter I summer)$2.25 /MMBtu | $2.05 /MMBtu $2.50 /MMBtu | $2.10 /MMBtu
NYMEX (WTI) crude oil price$52.50 /Bbl $37.50 /Bbl
California oil price premium (% of WTI)96% 94%
    
Production (Bcfe)   
East Division - Appalachia295 to 320 290 to 320
West Division - California~ 15 ~ 15
Total Production310 to 335 305 to 335
    
E&P Operating Costs ($/Mcfe)   
LOE$0.83 - $0.85 $0.83 - $0.86
G&A$0.20 - $0.22 $0.21 - $0.23
DD&A$0.58 - $0.62 $0.60 - $0.65
    
Other Business Segment Guidance (Millions)   
Gathering Segment Revenues$185 - $200 $185 - $200
Pipeline and Storage Segment Revenues$330 - $340 $330 - $340

* Commodity price assumptions are for the remaining 9 months of the fiscal year.

 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS
QUARTER ENDED DECEMBER 31, 2020
(Unaudited)
            
 Upstream Midstream Downstream    
            
 Exploration & Pipeline &     Corporate /  
(Thousands of Dollars)Production Storage Gathering Utility All Other Consolidated*
            
First quarter 2020 GAAP earnings$23,977  $18,105  $15,944  $26,583  $1,982  $86,591 
            
Items impacting comparability:           
Unrealized (gain) loss on other investments        1,019  1,019 
Tax impact of unrealized (gain) loss on other investments        (214) (214)
First quarter 2020 adjusted operating results23,977  18,105  15,944  26,583  2,787  87,396 
            
Drivers of adjusted operating results**           
            
Upstream Revenues           
Higher (lower) natural gas production39,164          39,164 
Higher (lower) crude oil production(1,885)         (1,885)
Higher (lower) realized natural gas prices, after hedging(11,301)         (11,301)
Higher (lower) realized crude oil prices, after hedging(5,791)         (5,791)
            
Midstream Revenues           
Higher (lower) operating revenues  12,280  9,655      21,935 
            
Downstream Margins***           
Impact of usage and weather      (1,164)   (1,164)
System modernization tracker revenues      920    920 
Higher (lower) energy marketing margins        (2,340) (2,340)
            
Operating Expenses           
Lower (higher) lease operating and transportation expenses(11,677)         (11,677)
Lower (higher) operating expenses(1,806)   (1,470) (1,956) 777  (4,455)
Lower (higher) depreciation / depletion(935) (3,052) (2,185)     (6,172)
            
Other Income (Expense)           
(Higher) lower other deductions  (510)     1,213  703 
(Higher) lower interest expense(1,132) (2,859) (1,510)   (346) (5,847)
            
Income Taxes           
Lower (higher) income tax expense / effective tax rate(3,163) 301  (18) (1,358) 2,306  (1,932)
            
All other / rounding98  (82) 134  12  (741) (579)
First quarter 2021 adjusted operating results25,549  24,183  20,550  23,037  3,656  96,975 
            
Items impacting comparability:           
Impairment of oil and gas properties(76,152)         (76,152)
Tax impact of impairment of oil and gas properties20,980          20,980 
Gain on sale of timber properties        51,066  51,066 
Tax impact of gain on sale of timber properties        (14,069) (14,069)
Unrealized gain (loss) on other investments        (1,298) (1,298)
Tax impact of unrealized gain (loss) on other investments        272  272 
First quarter 2021 GAAP earnings$(29,623) $24,183  $20,550  $23,037  $39,627  $77,774 
            
* Amounts do not reflect intercompany eliminations
** Drivers of operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.

 
NATIONAL FUEL GAS COMPANY
RECONCILIATION OF CURRENT AND PRIOR YEAR GAAP EARNINGS PER SHARE
QUARTER ENDED DECEMBER 31, 2020
(Unaudited)
            
 Upstream Midstream Downstream     
            
 Exploration & Pipeline &     Corporate /  
 Production Storage Gathering Utility All Other Consolidated*
            
First quarter 2020 GAAP earnings per share$0.28  $0.21  $0.18  $0.31  $0.02  $1.00 
Items impacting comparability:           
Unrealized (gain) loss on other investments, net of tax        0.01  0.01 
First quarter 2020 adjusted operating results per share0.28  0.21  0.18  0.31  0.03  1.01 
            
Drivers of adjusted operating results**           
            
Upstream Revenues           
Higher (lower) natural gas production0.43          0.43 
Higher (lower) crude oil production(0.02)         (0.02)
Higher (lower) realized natural gas prices, after hedging(0.12)         (0.12)
Higher (lower) realized crude oil prices, after hedging(0.06)         (0.06)
            
Midstream Revenues           
Higher (lower) operating revenues  0.13  0.11      0.24 
            
Downstream Margins***           
Impact of usage and weather      (0.01)   (0.01)
System modernization tracker revenues      0.01    0.01 
Higher (lower) energy marketing margins        (0.03) (0.03)
            
Operating Expenses           
Lower (higher) lease operating and transportation expenses(0.13)         (0.13)
Lower (higher) operating expenses(0.02)   (0.02) (0.02) 0.01  (0.05)
Lower (higher) depreciation / depletion(0.01) (0.03) (0.02)     (0.06)
            
Other Income (Expense)           
(Higher) lower other deductions  (0.01)     0.01   
(Higher) lower interest expense(0.01) (0.03) (0.02)     (0.06)
            
Income Taxes           
Lower (higher) income tax expense / effective tax rate(0.03)     (0.01) 0.03  (0.01)
            
Impact of additional shares(0.01) (0.01) (0.01) (0.02)   (0.05)
All other / rounding(0.02)     (0.01)   (0.03)
First quarter 2021 adjusted operating results per share0.28  0.26  0.22  0.25  0.05  1.06 
            
Items impacting comparability:           
Impairment of oil and gas properties, net of tax(0.60)         (0.60)
Gain on sale of timber properties, net of tax        0.40  0.40 
Unrealized gain (loss) on other investments, net of tax        (0.01) (0.01)
First quarter 2021 GAAP earnings per share$(0.32) $0.26  $0.22  $0.25  $0.44  $0.85 
            
* Amounts do not reflect intercompany eliminations
** Drivers of operating results have been calculated using the 21% federal statutory rate.
*** Downstream margin defined as operating revenues less purchased gas expense.

    
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
    
(Thousands of Dollars, except per share amounts)   
 Three Months Ended
 December 31,
 (Unaudited)
SUMMARY OF OPERATIONS2020 2019
Operating Revenues:   
Utility and Energy Marketing Revenues$189,466  $228,026 
Exploration and Production and Other Revenues192,035  167,193 
Pipeline and Storage and Gathering Revenues59,659  48,969 
 441,160  444,188 
Operating Expenses:   
Purchased Gas51,620  92,272 
Operation and Maintenance:   
Utility and Energy Marketing44,886  43,256 
Exploration and Production and Other42,027  36,693 
Pipeline and Storage and Gathering28,098  25,885 
Property, Franchise and Other Taxes22,781  23,144 
Depreciation, Depletion and Amortization83,120  74,918 
Impairment of Oil and Gas Producing Properties76,152   
 348,684  296,168 
Gain on Sale of Timber Properties51,066   
Operating Income143,542  148,020 
    
Other Income (Expense):   
Other Income (Deductions)(2,176) (3,040)
Interest Expense on Long-Term Debt(32,256) (25,443)
Other Interest Expense(1,919) (1,551)
    
Income Before Income Taxes107,191  117,986 
    
Income Tax Expense29,417  31,395 
    
Net Income Available for Common Stock$77,774  $86,591 
    
Earnings Per Common Share   
Basic$0.85  $1.00 
Diluted$0.85  $1.00 
    
Weighted Average Common Shares:   
Used in Basic Calculation91,007,657  86,378,450 
Used in Diluted Calculation91,508,259  86,883,152 

 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
  
 December 31, September 30,
(Thousands of Dollars)2020 2020
    
ASSETS   
Property, Plant and Equipment$12,495,227  $12,351,852 
Less - Accumulated Depreciation, Depletion and Amortization 6,503,561   6,353,785 
Net Property, Plant and Equipment 5,991,666   5,998,067 
Assets Held for Sale, Net    53,424 
    
Current Assets:   
Cash and Temporary Cash Investments 109,413   20,541 
Receivables - Net 178,584   143,583 
Unbilled Revenue 45,829   17,302 
Gas Stored Underground 19,648   33,338 
Materials, Supplies and Emission Allowances 51,694   51,877 
Unrecovered Purchased Gas Costs 367    
Other Current Assets 47,904   47,557 
Total Current Assets 453,439   314,198 
    
Other Assets:   
Recoverable Future Taxes 117,431   118,310 
Unamortized Debt Expense 11,870   12,297 
Other Regulatory Assets 153,172   156,106 
Deferred Charges 61,986   67,131 
Other Investments 145,921   154,502 
Goodwill 5,476   5,476 
Prepaid Post-Retirement Benefit Costs 80,032   76,035 
Fair Value of Derivative Financial Instruments 18,094   9,308 
Other 81   81 
Total Other Assets 594,063   599,246 
Total Assets$7,039,168  $6,964,935 
    
CAPITALIZATION AND LIABILITIES   
Capitalization:   
Comprehensive Shareholders' Equity   
Common Stock, $1 Par Value Authorized - 200,000,000 Shares; Issued and   
Outstanding - 91,152,710 Shares and 90,954,696 Shares, Respectively$91,153  $90,955 
Paid in Capital 1,004,369   1,004,158 
Earnings Reinvested in the Business 1,028,844   991,630 
Accumulated Other Comprehensive Loss (79,741)  (114,757)
Total Comprehensive Shareholders' Equity 2,044,625   1,971,986 
Long-Term Debt, Net of Current Portion and Unamortized Discount and Debt Issuance Costs 2,130,473   2,629,576 
Total Capitalization 4,175,098   4,601,562 
    
Current and Accrued Liabilities:   
Notes Payable to Banks and Commercial Paper 25,000   30,000 
Current Portion of Long-Term Debt 500,000    
Accounts Payable 96,905   134,126 
Amounts Payable to Customers 5,823   10,788 
Dividends Payable 40,560   40,475 
Interest Payable on Long-Term Debt 45,350   27,521 
Customer Advances 16,032   15,319 
Customer Security Deposits 17,623   17,199 
Other Accruals and Current Liabilities 154,377   140,176 
Fair Value of Derivative Financial Instruments 4,513   43,969 
Total Current and Accrued Liabilities 906,183   459,573 
    
Deferred Credits:   
Deferred Income Taxes 735,236   696,054 
Taxes Refundable to Customers 357,354   357,508 
Cost of Removal Regulatory Liability 234,641   230,079 
Other Regulatory Liabilities 168,188   161,573 
Pension and Other Post-Retirement Liabilities 124,097   127,181 
Asset Retirement Obligations 192,682   192,228 
Other Deferred Credits 145,689   139,177 
Total Deferred Credits 1,957,887   1,903,800 
Commitments and Contingencies     
Total Capitalization and Liabilities$7,039,168  $6,964,935 

     
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
  Three Months Ended
  December 31,
(Thousands of Dollars) 2020 2019
     
Operating Activities:    
Net Income Available for Common Stock $77,774  $86,591 
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities:    
Gain on Sale of Timber Properties (51,066)  
Impairment of Oil and Gas Producing Properties 76,152   
Depreciation, Depletion and Amortization 83,120  74,918 
Deferred Income Taxes 26,591  51,366 
Stock-Based Compensation 3,933  3,266 
Other 2,887  1,911 
Change in:    
Receivables and Unbilled Revenue (63,606) (58,655)
Gas Stored Underground and Materials, Supplies and Emission Allowances 13,873  6,985 
Unrecovered Purchased Gas Costs (367) 627 
Other Current Assets (251) 14 
Accounts Payable (541) 8,280 
Amounts Payable to Customers (4,965) (573)
Customer Advances 713  683 
Customer Security Deposits 424  (700)
Other Accruals and Current Liabilities 27,615  15,438 
Other Assets 10,066  (28,259)
Other Liabilities 2,391  5,857 
Net Cash Provided by Operating Activities $204,743  $167,749 
     
Investing Activities:    
Capital Expenditures $(183,301) $(198,495)
Net Proceeds from Sale of Timber Properties 104,582   
Other 11,849  5,212 
Net Cash Used in Investing Activities $(66,870) $(193,283)
     
Financing Activities:    
Changes in Notes Payable to Banks and Commercial Paper $(5,000) $84,600 
Dividends Paid on Common Stock (40,475) (37,547)
Net Repurchases of Common Stock (3,526) (4,147)
Net Cash Provided by (Used in) Financing Activities $(49,001) $42,906 
     
Net Increase in Cash, Cash Equivalents, and Restricted Cash 88,872  17,372 
Cash, Cash Equivalents, and Restricted Cash at Beginning of Period 20,541  27,260 
Cash, Cash Equivalents, and Restricted Cash at December 31 $109,413  $44,632 

      
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
      
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
      
UPSTREAM BUSINESS
      
      
 Three Months Ended
(Thousands of Dollars, except per share amounts)December 31,
EXPLORATION AND PRODUCTION SEGMENT2020 2019 Variance
Total Operating Revenues$191,395  $165,939  $25,456 
      
Operating Expenses:     
Operation and Maintenance:     
General and Administrative Expense16,953  15,380  1,573 
Lease Operating and Transportation Expense65,581  50,800  14,781 
All Other Operation and Maintenance Expense3,671  2,958  713 
Property, Franchise and Other Taxes4,446  4,701  (255)
Depreciation, Depletion and Amortization45,332  44,148  1,184 
Impairment of Oil and Gas Producing Properties76,152    76,152 
 212,135  117,987  94,148 
      
Operating Income (Loss)(20,740) 47,952 (68,692)
      
Other Income (Expense):     
Non-Service Pension and Post-Retirement Benefit Costs(285) (395) 110 
Interest and Other Income91  234  (143)
Interest Expense(15,490) (14,057) (1,433)
      
Income (Loss) Before Income Taxes(36,424) 33,734  (70,158)
Income Tax Expense (Benefit)(6,801) 9,757  (16,558)
Net Income (Loss)$(29,623) $23,977  $(53,600)
      
Net Income (Loss) Per Share (Diluted)$(0.32) $0.28  $(0.60)

      
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
      
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
      
MIDSTREAM BUSINESSES
      
      
 Three Months Ended
(Thousands of Dollars, except per share amounts)December 31,
PIPELINE AND STORAGE SEGMENT2020 2019 Variance
Revenues from External Customers$59,308  $48,969  $10,339 
Intersegment Revenues28,456  23,251  5,205 
Total Operating Revenues87,764  72,220  15,544 
      
Operating Expenses:     
Purchased Gas13  (7) 20 
Operation and Maintenance21,173  20,930  243 
Property, Franchise and Other Taxes8,444  8,355  89 
Depreciation, Depletion and Amortization15,468  11,605  3,863 
 45,098  40,883  4,215 
      
Operating Income42,666  31,337  11,329 
      
Other Income (Expense):     
Non-Service Pension and Post-Retirement Benefit (Costs) Credit125  (174) 299 
Interest and Other Income856  1,552  (696)
Interest Expense(10,731) (7,112) (3,619)
      
Income Before Income Taxes32,916  25,603  7,313 
Income Tax Expense8,733  7,498  1,235 
Net Income$24,183  $18,105  $6,078 
      
Net Income Per Share (Diluted)$0.26  $0.21  $0.05 
      
      
 Three Months Ended
 December 31,
GATHERING SEGMENT2020 2019 Variance
Revenues from External Customers$351  $  $351 
Intersegment Revenues46,658  34,788  11,870 
Total Operating Revenues47,009  34,788  12,221 
      
Operating Expenses:     
Operation and Maintenance7,203  5,342  1,861 
Property, Franchise and Other Taxes13  15  (2)
Depreciation, Depletion and Amortization7,904  5,138  2,766 
 15,120  10,495  4,625 
      
Operating Income31,889  24,293  7,596 
      
Other Income (Expense):     
Non-Service Pension and Post-Retirement Benefit Costs(68) (71) 3 
Interest and Other Income234  68  166 
Interest Expense(4,131) (2,219) (1,912)
      
Income Before Income Taxes27,924  22,071  5,853 
Income Tax Expense7,374  6,127  1,247 
Net Income$20,550  $15,944  $4,606 
      
Net Income Per Share (Diluted)$0.22  $0.18  $0.04 

      
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
      
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
      
DOWNSTREAM BUSINESS
      
      
 Three Months Ended
(Thousands of Dollars, except per share amounts)December 31,
UTILITY SEGMENT2020 2019 Variance
Revenues from External Customers$188,901  $194,910  $(6,009)
Intersegment Revenues100  1,915  (1,815)
Total Operating Revenues189,001  196,825  (7,824)
      
Operating Expenses:     
Purchased Gas77,032  84,705  (7,673)
Operation and Maintenance45,252  42,843  2,409 
Property, Franchise and Other Taxes9,749  9,814  (65)
Depreciation, Depletion and Amortization13,994  13,630  364 
 146,027  150,992  (4,965)
      
Operating Income42,974  45,833  (2,859)
      
Other Income (Expense):     
Non-Service Pension and Post-Retirement Benefit Costs(6,684) (6,764) 80 
Interest and Other Income738  950  (212)
Interest Expense(5,452) (5,673) 221 
      
Income Before Income Taxes31,576  34,346  (2,770)
Income Tax Expense8,539  7,763  776 
Net Income$23,037  $26,583  $(3,546)
      
Net Income Per Share (Diluted)$0.25  $0.31  $(0.06)

 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
      
SEGMENT OPERATING RESULTS AND STATISTICS
(UNAUDITED)
      
 Three Months Ended
(Thousands of Dollars, except per share amounts)December 31,
ALL OTHER2020 2019 Variance
Revenues from External Customers$1,110  $34,235  $(33,125)
Intersegment Revenues20  177  (157)
Total Operating Revenues1,130  34,412  (33,282)
Operating Expenses:     
Purchased Gas2,287  32,033  (29,746)
Operation and Maintenance764  1,703  (939)
Property, Franchise and Other Taxes8  142  (134)
Depreciation, Depletion and Amortization386  203  183 
 3,445  34,081  (30,636)
Gain on Sale of Timber Properties51,066    51,066 
Operating Income48,751  331  48,420 
      
Other Income (Expense):     
Non-Service Pension and Post-Retirement Benefit Costs(4) (69) 65 
Interest and Other Income185  278  (93)
Interest Expense  (18) 18 
      
Income before Income Taxes48,932  522  48,410 
Income Tax Expense11,372  151  11,221 
Net Income$37,560  $371  $37,189 
Net Income Per Share (Diluted)$0.41  $  $0.41 
  
 Three Months Ended
 December 31,
CORPORATE2020 2019 Variance
Revenues from External Customers$95  $135  $(40)
Intersegment Revenues663  1,094  (431)
Total Operating Revenues758  1,229  (471)
Operating Expenses:     
Operation and Maintenance2,599  2,644  (45)
Property, Franchise and Other Taxes121  117  4 
Depreciation, Depletion and Amortization36  194  (158)
 2,756  2,955  (199)
      
Operating Loss(1,998) (1,726) (272)
      
Other Income (Expense):     
Non-Service Pension and Post-Retirement Benefit Costs(923) (775) (148)
Interest and Other Income38,979  31,073  7,906 
Interest Expense on Long-Term Debt(32,256) (25,443) (6,813)
Other Interest Expense(1,535) (1,419) (116)
      
Income before Income Taxes2,267  1,710  557 
Income Tax Expense200  99  101 
Net Income$2,067  $1,611  $456 
Net Income Per Share (Diluted)$0.03  $0.02  $0.01 
      
      
 Three Months Ended
 December 31,
INTERSEGMENT ELIMINATIONS2020 2019 Variance
Intersegment Revenues$(75,897) $(61,225) $(14,672)
Operating Expenses:     
Purchased Gas(27,712) (24,459) (3,253)
Operation and Maintenance(48,185) (36,766) (11,419)
 (75,897) (61,225) (14,672)
Operating Income     
Other Income (Expense):     
Interest and Other Deductions(35,420) (28,947) (6,473)
Interest Expense35,420  28,947  6,473 
Net Income$  $  $ 
Net Income Per Share (Diluted)$  $  $ 

      
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
      
SEGMENT INFORMATION (Continued)
(Thousands of Dollars)
      
      
 Three Months Ended
 December 31,
 (Unaudited)
     Increase
 2020 2019 (Decrease)
      
Capital Expenditures:     
Exploration and Production$81,339 (1)(2)$126,918 (3)(4)$(45,579)
Pipeline and Storage43,723 (1)(2)57,084 (3)(4)(13,361)
Gathering8,320 (1)(2)9,838 (3)(4)(1,518)
Utility17,345 (1)(2)17,165 (3)(4)180 
Total Reportable Segments150,727  211,005  (60,278)
All Other  22  (22)
Corporate39  185  (146)
Eliminations154    154 
Total Capital Expenditures$150,920  $211,212  $(60,292)

(1) Capital expenditures for the quarter ended December 31, 2020, include accounts payable and accrued liabilities related to capital expenditures of $35.1 million, $11.2 million, $2.3 million, and $3.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2020, since they represent non-cash investing activities at that date.

(2) Capital expenditures for the quarter ended December 31, 2020, exclude capital expenditures of $45.8 million, $17.3 million, $13.5 million and $10.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2020 and paid during the quarter ended December 31, 2020. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2020, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2020.

(3) Capital expenditures for the quarter ended December 31, 2019, include accounts payable and accrued liabilities related to capital expenditures of $62.3 million, $22.7 million, $5.3 million, and $3.5 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts have been excluded from the Consolidated Statement of Cash Flows at December 31, 2019, since they represent non-cash investing activities at that date.

(4) Capital expenditures for the quarter ended December 31, 2019, exclude capital expenditures of $38.0 million, $23.8 million, $6.6 million and $12.7 million in the Exploration and Production segment, Pipeline and Storage segment, Gathering segment and Utility segment, respectively. These amounts were in accounts payable and accrued liabilities at September 30, 2019 and paid during the quarter ended December 31, 2019. These amounts were excluded from the Consolidated Statement of Cash Flows at September 30, 2019, since they represented non-cash investing activities at that date. These amounts have been included in the Consolidated Statement of Cash Flows at December 31, 2019.

             
DEGREE DAYS            
          Percent Colder
          (Warmer) Than:
Three Months Ended December 31,Normal 2020 2019 Normal (1) Last Year (1)
             
Buffalo, NY2,253  1,921  2,232  (14.7) (13.9)
Erie, PA2,044  1,697  1,906  (17.0) (11.0)

(1) Percents compare actual 2020 degree days to normal degree days and actual 2020 degree days to actual 2019 degree days.

       
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
       
EXPLORATION AND PRODUCTION INFORMATION
       
       
  Three Months Ended
  December 31,
      Increase
  2020 2019 (Decrease)
       
Gas Production/Prices:      
Production (MMcf)      
Appalachia 75,669  54,284  21,385 
West Coast 441  487  (46)
Total Production 76,110  54,771  21,339 
       
Average Prices (Per Mcf)      
Appalachia $2.17  $2.16  $0.01 
West Coast 5.03  4.98  0.05 
Weighted Average 2.19  2.19   
Weighted Average after Hedging 2.14  2.32  (0.18)
       
Oil Production/Prices:      
Production (Thousands of Barrels)      
Appalachia      
West Coast 563  601  (38)
Total Production 563  601  (38)
       
Average Prices (Per Barrel)      
Appalachia $38.53  $54.49  $(15.96)
West Coast 43.48  62.63  (19.15)
Weighted Average 43.48  62.63  (19.15)
Weighted Average after Hedging 49.91  62.92  (13.01)
       
Total Production (MMcfe) 79,488  58,377  21,111 
       
Selected Operating Performance Statistics:      
General & Administrative Expense per Mcfe (1) $0.21  $0.26  $(0.05)
Lease Operating and Transportation Expense per Mcfe (1)(2) $0.83  $0.87  $(0.04)
Depreciation, Depletion & Amortization per Mcfe (1) $0.57  $0.76  $(0.19)

(1) Refer to page 13 for the General and Administrative Expense, Lease Operating and Transportation Expense and Depreciation, Depletion, and Amortization Expense for the Exploration and Production segment.

(2) Amounts include transportation expense of $0.57 and $0.57 per Mcfe for the three months ended December 31, 2020 and December 31, 2019, respectively.

 
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
       
EXPLORATION AND PRODUCTION INFORMATION
 
       
Hedging Summary for Remaining Nine Months of Fiscal 2021 Volume  Average Hedge Price
Oil Swaps      
Brent 962,000 BBL $57.35 / BBL
NYMEX 117,000 BBL $51.00 / BBL
Total 1,079,000 BBL $56.66 / BBL
       
Gas Swaps      
NYMEX 114,630,000 MMBTU $2.63 / MMBTU
No Cost Collars 21,150,000 MMBTU $2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling)
Fixed Price Physical Sales 55,788,503 MMBTU $2.24 / MMBTU
Total 191,568,503 MMBTU   
       
Hedging Summary for Fiscal 2022 Volume  Average Hedge Price
Oil Swaps      
Brent 540,000 BBL $55.14 / BBL
NYMEX 156,000 BBL $51.00 / BBL
Total 696,000 BBL $54.21 / BBL
       
Gas Swaps      
NYMEX 140,630,000 MMBTU $2.65 / MMBTU
No Cost Collars 2,350,000 MMBTU $2.28 / MMBTU (Floor) / $2.77 / MMBTU (Ceiling)
Fixed Price Physical Sales 45,887,027 MMBTU $2.24 / MMBTU
Total 188,867,027 MMBTU   
       
Hedging Summary for Fiscal 2023 Volume  Average Hedge Price
Oil Swaps      
Brent 120,000 BBL $50.00 / BBL
Total 120,000 BBL $50.00 / BBL
       
Gas Swaps      
NYMEX 24,340,000 MMBTU $2.55 / MMBTU
Fixed Price Physical Sales 38,313,018 MMBTU $2.26 / MMBTU
Total 62,653,018 MMBTU   
       
Hedging Summary for Fiscal 2024 Volume  Average Hedge Price
Oil Swaps      
Brent 120,000 BBL $50.30 / BBL
Total 120,000 BBL $50.30 / BBL
       
Gas Swaps      
NYMEX 1,150,000 MMBTU $2.45 / MMBTU
Fixed Price Physical Sales 20,799,229 MMBTU $2.25 / MMBTU
Total 21,949,229 MMBTU   
       
Hedging Summary for Fiscal 2025 Volume  Average Hedge Price
Fixed Price Physical Sales 2,293,200 MMBTU $2.18 / MMBTU

       
NATIONAL FUEL GAS COMPANY
AND SUBSIDIARIES
       
       
       
Pipeline & Storage Throughput - (millions of cubic feet - MMcf)
       
  Three Months Ended
  December 31,
      Increase
  2020 2019 (Decrease)
Firm Transportation - Affiliated 29,964  34,667  (4,703)
Firm Transportation - Non-Affiliated 173,064  173,981  (917)
Interruptible Transportation 590  714  (124)
  203,618  209,362  (5,744)
       
Gathering Volume - (MMcf)      
  Three Months Ended
  December 31,
      Increase
  2020 2019 (Decrease)
Gathered Volume 87,135  64,392  22,743 
       
       
Utility Throughput - (MMcf)      
  Three Months Ended
  December 31,
      Increase
  2020 2019 (Decrease)
Retail Sales:      
Residential Sales 18,412  19,476  (1,064)
Commercial Sales 2,528  2,812  (284)
Industrial Sales 153  217  (64)
  21,093  22,505  (1,412)
Transportation 17,935  20,556  (2,621)
  39,028  43,061  (4,033)
          

NATIONAL FUEL GAS COMPANYAND SUBSIDIARIES

NON-GAAP FINANCIAL MEASURES

In addition to financial measures calculated in accordance with generally accepted accounting principles (GAAP), this press release contains information regarding Adjusted Operating Results, Adjusted EBITDA and free cash flow, which are non-GAAP financial measures. The Company believes that these non-GAAP financial measures are useful to investors because they provide an alternative method for assessing the Company's ongoing operating results or liquidity and for comparing the Company’s financial performance to other companies. The Company's management uses these non-GAAP financial measures for the same purpose, and for planning and forecasting purposes. The presentation of non-GAAP financial measures is not meant to be a substitute for financial measures in accordance with GAAP.

Management defines Adjusted Operating Results as reported GAAP earnings before items impacting comparability. The following table reconciles National Fuel's reported GAAP earnings to Adjusted Operating Results for the three months ended December 31, 2020 and 2019:

  Three Months Ended
  December 31,
(in thousands except per share amounts) 2020 2019
Reported GAAP Earnings $77,774  $86,591 
Items impacting comparability:    
Impairment of oil and gas properties (E&P) 76,152   
Tax impact of impairment of oil and gas properties (20,980)  
Gain on sale of timber properties (Corporate/All Other) (51,066)  
Tax impact of gain on sale of timber properties 14,069   
Unrealized (gain) loss on other investments (Corporate/All Other) 1,298  1,019 
Tax impact of unrealized (gain) loss on other investments (272) (214)
Adjusted Operating Results $96,975  $87,396 
     
Reported GAAP Earnings per share $0.85  $1.00 
Items impacting comparability:    
Impairment of oil and gas properties, net of tax (E&P) 0.60   
Gain on sale of timber properties, net of tax (Corporate/All Other) (0.40)  
Unrealized (gain) loss on other investments, net of tax (Corporate/All Other) 0.01  0.01 
Adjusted Operating Results Per Share $1.06  $1.01 

Management defines Adjusted EBITDA as reported GAAP earnings before the following items: interest expense, income taxes, depreciation, depletion and amortization, other income and deductions, impairments, and other items reflected in operating income that impact comparability. The following tables reconcile National Fuel's reported GAAP earnings to Adjusted EBITDA for the three months ended December 31, 2020 and 2019:

  Three Months Ended
  December 31,
(in thousands) 2020 2019
Reported GAAP Earnings $77,774  $86,591 
Depreciation, Depletion and Amortization 83,120  74,918 
Other (Income) Deductions 2,176  3,040 
Interest Expense 34,175  26,994 
Income Taxes 29,417  31,395 
Impairment of Oil and Gas Producing Properties 76,152   
Gain on Sale of Timber Properties (51,066)  
Adjusted EBITDA $251,748  $222,938 
     
Adjusted EBITDA by Segment    
Pipeline and Storage Adjusted EBITDA $58,134  $42,942 
Gathering Adjusted EBITDA 39,793  29,431 
Total Midstream Businesses Adjusted EBITDA 97,927  72,373 
Exploration and Production Adjusted EBITDA 100,744  92,100 
Utility Adjusted EBITDA 56,968  59,463 
Corporate and All Other Adjusted EBITDA (3,891) (998)
Total Adjusted EBITDA $251,748  $222,938 

 
NATIONAL FUEL GAS COMPANYAND SUBSIDIARIESNON-GAAP FINANCIAL MEASURES SEGMENT ADJUSTED EBITDA
   
  Three Months Ended
  December 31,
(in thousands) 2020 2019
Exploration and Production Segment    
Reported GAAP Earnings $(29,623) $23,977 
Depreciation, Depletion and Amortization 45,332  44,148 
Other (Income) Deductions 194  161 
Interest Expense 15,490  14,057 
Income Taxes (6,801) 9,757 
Impairment of Oil and Gas Producing Properties 76,152   
Adjusted EBITDA $100,744  $92,100 
     
Pipeline and Storage Segment    
Reported GAAP Earnings $24,183  $18,105 
Depreciation, Depletion and Amortization 15,468  11,605 
Other (Income) Deductions (981) (1,378)
Interest Expense 10,731  7,112 
Income Taxes 8,733  7,498 
Adjusted EBITDA $58,134  $42,942 
     
Gathering Segment    
Reported GAAP Earnings $20,550  $15,944 
Depreciation, Depletion and Amortization 7,904  5,138 
Other (Income) Deductions (166) 3 
Interest Expense 4,131  2,219 
Income Taxes 7,374  6,127 
Adjusted EBITDA $39,793  $29,431 
     
Utility Segment    
Reported GAAP Earnings $23,037  $26,583 
Depreciation, Depletion and Amortization 13,994  13,630 
Other (Income) Deductions 5,946  5,814 
Interest Expense 5,452  5,673 
Income Taxes 8,539  7,763 
Adjusted EBITDA $56,968  $59,463 
     
Corporate and All Other    
Reported GAAP Earnings $39,627  $1,982 
Depreciation, Depletion and Amortization 422  397 
Gain on Sale of Timber Properties (51,066)  
Other (Income) Deductions (2,817) (1,560)
Interest Expense (1,629) (2,067)
Income Taxes 11,572  250 
Adjusted EBITDA $(3,891) $(998)
         

Management defines free cash flow as funds from operations less capital expenditures. The Company is unable to provide a reconciliation of projected free cash flow as described in this release to its comparable financial measure calculated in accordance with GAAP without unreasonable efforts. This is due to our inability to calculate the comparable GAAP projected metrics, including operating income and total production costs, given the unknown effect, timing, and potential significance of certain income statement items.

  
Kenneth E. WebsterInvestor Relations 716-857-7067Karen M. CamioloTreasurer 716-857-7344
  

Primary Logo

Source: National Fuel Gas Company


Serious News for Serious Traders! Try StreetInsider.com Premium Free!

You May Also Be Interested In





Related Categories

Globe Newswire, Press Releases

Related Entities

Dividend, Crude Oil, Earnings, Definitive Agreement